The bottom of Queensland’s property market has been predicted numerous times over the past year or so. However, the mooted recovery in the tourism industry has failed to materialise thanks to the ongoing strength of the dollar, and the resources expansion – while planned – is yet to materialise, while Brisbane’s technically undersupplied market refuses to budge.
Add to that the double whammy of the floods and Cyclone Yasi, and you could be forgiven for giving up on the Sunshine State as an investment option for the foreseeable future. However, despite the travails Queensland has withstood in the past few years, BIS Shrapnel economist Angie Zigomanis is still confident that the "pieces are falling into place for an upturn."
"Admittedly, Queensland has been in the doldrums for a while," he says. "It suffered the most of all states from the impact of the GFC, and from the stalling of mining expansion, a lack of construction, and the slowdown in the tourist industry. That saw employment and population fall, with a knock-on effect on demand and confidence."
Zigomanis highlights, however, that the spate of coal-seam-gas (CSG) projects greenlighted at the end of last year is set to give the Queensland resources industry a huge shot in the arm.
"A number of CSG projects have been approved and are set to properly kick in at the end of the year. That’s going to drive stronger employment growth, which will increase migration and demand for housing, especially in regional areas," he says.
It’s that population inflow which is going to be essential. Interstate migration, in particular, has slowed from a torrent to a trickle, down from around 50,000 per annum in its heyday to less than 10,000 in 2010. RP Data’s Tim Lawless agrees that the dwindling population figures will turn around in the next 12 months, as NSW residents in particular look north and see more affordable housing and improving job opportunities up there.
The reconstruction efforts following the floods and Cyclone Yasi will also assist in creating new jobs and improving population inflows, adds Zigomanis. However, Dan Molloy, president of the Real Estate Institute of Queensland (REIQ), cautions that the aftermath of the floods still remains uncertain.
"It’s still difficult to put trends together," he comments. "Our members are seeing more enquiries, and it appears the market is returning back to normal in Brisbane, but it’s still too early to assess the impact for sure."
Even so, Molloy suggests that the beginning of 2011 was going to be rough sailing for Brisbane even without the natural disasters.
"Brisbane saw a difficult second half of 2010 and we always felt the first few months of 2011 would be tough, anyway," he comments. "Sellers are becoming more realistic in their expectations, however, and that’s presenting good buying opportunities for investors."
"In the medium term, the commitment to infrastructure repair, plus the reinvigoration of the mining industry means that the long-term fundamentals are still strong. The market conditions will be weighted more by the wider economic factors, and not the floods."
Lawless warns that some of the flood-affected areas could suffer more than others.
"While the detrimental effects of the floods will be centralised on the areas that have been inundated, some areas will see longer-lasting effects," he comments. "Those are likely to be the areas that don’t necessarily have the ‘lifestyle’ attraction – such as Ipswich or Rocklea."
Meanwhile, Bill Morris, author of the Midwood Queensland Investment Report, argues that better water management could help mitigate concerns over flood-affected areas.
"The flooding in Brisbane was more of an unnatural occurrence than a natural disaster," says Morris.
"The mismanagement of Wivenhoe Dam played a significant part in the floods occurring. As long as lessons are learnt from this time around, and if the state government considers the possibility of building more dams, then there will be less of a risk of flooding in the future."
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